For the week of August 25 – 29, 2014
It’s a quiet day in Canada this morning, with only the Bloomberg Nanos Confidence Index set to be released for the week of August 22. This is a weekly survey indicating consumer’s thoughts on the strength of the economy, job security and real estate. Last week’s index landed at 58.8, indicating there is a more positive than negative outlook. South of the border, there are a number of releases scheduled for the day. The Chicago Fed National Activity Index released this morning at 0.39, significantly beating expectations of 0.20 for the month of July and much higher than last month’s 0.12. This positive value indicates above-average growth in the economy. The Dallas Fed Manufacturing Outlook level of General Business Activity is expected to decline down to 12.5 in August from 12.7 in July indicating sentiment of manufacturers in the Texas area has slightly declined. Also on the agenda is New Home Sales with surveyed results expecting a 430K increase in sales or 5.9% over the month of July. Economists hope the housing market has turned around from last month when new home sales declined 8.1%, lagging behind the increased factory activity in the U.S. economy.
The Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming has wrapped up with a few statements from Fed Chairwoman Janet Yellen gaining some grounds. Yellen noted the job market has improved faster than expected over the year and that the significant slack found earlier in the year (which goes hand-in hand with low interest rates) may not be the case anymore. Quantitative Easing is expected to end in October and with the jobs outlook improving and inflation higher we may see indication of rising rates earlier than mid-2015.
Headlines throughout Canada this week include updates to the Current Account Balances for the second quarter of 2014, released on Thursday. Economists expect -$11.6B, minimally changed from Q1’s -$12.4B. Friday’s releases include GDP, Industrial Product Prices and the Raw Material Price Index. Canada’s economic growth for Q2 is expected to advance 2.7%, up from first quarter’s sluggish growth of just 1.2% blamed on the harsh North American winter. Over June, the economists expect the economy to have advanced 0.2% and 3.0% on a year-over-year basis.
There are many releases throughout the United States this week, with focus falling mainly on Durable Goods Orders, Housing Prices, and Consumer Confidence on Tuesday and Jobless Claims and GDP on Thursday. GDP is expected to advance 3.9% on a quarter-over-quarter basis, down from 4.0% from April through June. So far the U.S. economy is expected to expand 3% in Q3 according to estimates of 76 economists.
In the currency markets, the Canadian dollar has gained 0.1% against its U.S. counterpart in early trading this morning. Governor Poloz speaks today at the Canadian Association of Business Economists titled on “Integrating Uncertainty and Monetary Policymaking: A Practitioner’s Perspective” however there will be no sharing of the presentation. Investors will be looking towards the GDP this week out of both Canada as the next piece of major economic data.
Todays expected range: 1.0940 – 1.1040
Posted by Concentra Financial Markets